Update xterm and make term find styles consistent with editor

- A bunch of changes to xterm.js including bg/fg decoration overrides
- Tweak find colors to use background instead of border, align with the editor
- Change high contrast themes to also align, including selection bg
- Clear the find active result decoration on blur and when the selection changes

Fixes #147013
Fixes #145751

11 files changed, 130 insertions, 83 deletions

diff --git a/package.json b/package.json
index 4cbb594e9c8..acc64a5ce02 100644
--- a/package.json
+++ b/package.json
@@ -84,12 +84,12 @@
     "vscode-proxy-agent": "^0.12.0",
     "vscode-regexpp": "^3.1.0",
     "vscode-textmate": "7.0.1",
-    "xterm": "4.19.0-beta.29",
-    "xterm-addon-search": "0.9.0-beta.26",
+    "xterm": "4.19.0-beta.41",
+    "xterm-addon-search": "0.9.0-beta.35",
     "xterm-addon-serialize": "0.7.0-beta.12",
     "xterm-addon-unicode11": "0.4.0-beta.3",
-    "xterm-addon-webgl": "0.12.0-beta.29",
-    "xterm-headless": "4.19.0-beta.29",
+    "xterm-addon-webgl": "0.12.0-beta.33",
+    "xterm-headless": "4.19.0-beta.41",
     "yauzl": "^2.9.2",
     "yazl": "^2.4.3"
   },
diff --git a/remote/package.json b/remote/package.json
index ad16af4878c..2d7ace1fd91 100644
--- a/remote/package.json
+++ b/remote/package.json
@@ -24,12 +24,12 @@
     "vscode-proxy-agent": "^0.12.0",
     "vscode-regexpp": "^3.1.0",
     "vscode-textmate": "7.0.1",
-    "xterm": "4.19.0-beta.29",
-    "xterm-addon-search": "0.9.0-beta.26",
+    "xterm": "4.19.0-beta.41",
+    "xterm-addon-search": "0.9.0-beta.35",
     "xterm-addon-serialize": "0.7.0-beta.12",
     "xterm-addon-unicode11": "0.4.0-beta.3",
-    "xterm-addon-webgl": "0.12.0-beta.29",
-    "xterm-headless": "4.19.0-beta.29",
+    "xterm-addon-webgl": "0.12.0-beta.33",
+    "xterm-headless": "4.19.0-beta.41",
     "yauzl": "^2.9.2",
     "yazl": "^2.4.3"
   },
diff --git a/remote/web/package.json b/remote/web/package.json
index b56da999d19..4a477cd72d7 100644
--- a/remote/web/package.json
+++ b/remote/web/package.json
@@ -10,9 +10,9 @@
 		"tas-client-umd": "0.1.5",
 		"vscode-oniguruma": "1.6.1",
 		"vscode-textmate": "7.0.1",
-		"xterm": "4.19.0-beta.29",
-		"xterm-addon-search": "0.9.0-beta.26",
+		"xterm": "4.19.0-beta.41",
+		"xterm-addon-search": "0.9.0-beta.35",
 		"xterm-addon-unicode11": "0.4.0-beta.3",
-		"xterm-addon-webgl": "0.12.0-beta.29"
+		"xterm-addon-webgl": "0.12.0-beta.33"
 	}
 }
diff --git a/remote/web/yarn.lock b/remote/web/yarn.lock
index 0e4285693c1..a852b0f91e9 100644
--- a/remote/web/yarn.lock
+++ b/remote/web/yarn.lock
@@ -113,22 +113,22 @@ vscode-textmate@7.0.1:
   resolved "https://registry.yarnpkg.com/vscode-textmate/-/vscode-textmate-7.0.1.tgz#8118a32b02735dccd14f893b495fa5389ad7de79"
   integrity sha512-zQ5U/nuXAAMsh691FtV0wPz89nSkHbs+IQV8FDk+wew9BlSDhf4UmWGlWJfTR2Ti6xZv87Tj5fENzKf6Qk7aLw==
 
-xterm-addon-search@0.9.0-beta.26:
-  version "0.9.0-beta.26"
-  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.26.tgz#24259b892ce5cd8eff207e4e334dc06776356fe5"
-  integrity sha512-gOz6v9do7yBDP8e4zdpnDIi3DsyPdLA10lsJDucfMN4nJFM2PjJAsu1fbqq1pXdcu14fHIYzbsp9wIMiW524zQ==
+xterm-addon-search@0.9.0-beta.35:
+  version "0.9.0-beta.35"
+  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.35.tgz#524ee3be855c1e8db234c6795bdb44bb6baff8fd"
+  integrity sha512-hTDqAhqlhBvz3dtdK1Tg5Al2U3HquSHpV1xCX+bbOmbgprAxUrSQxslUPDD69CTazzTyif3L19M08hccRyr1Ug==
 
 xterm-addon-unicode11@0.4.0-beta.3:
   version "0.4.0-beta.3"
   resolved "https://registry.yarnpkg.com/xterm-addon-unicode11/-/xterm-addon-unicode11-0.4.0-beta.3.tgz#f350184155fafd5ad0d6fbf31d13e6ca7dea1efa"
   integrity sha512-FryZAVwbUjKTmwXnm1trch/2XO60F5JsDvOkZhzobV1hm10sFLVuZpFyHXiUx7TFeeFsvNP+S77LAtWoeT5z+Q==
 
-xterm-addon-webgl@0.12.0-beta.29:
-  version "0.12.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.29.tgz#7a508595c4521d14d7ed4315a121f9e3f230a0f0"
-  integrity sha512-NcZBsD0ar3ZpQX070hDIsyEBl/StRMNu6U+9crNpiD2rQVfkM1vcWkOv31Zlj3eu6/f8z5aStyZLRMCGFwiRbA==
+xterm-addon-webgl@0.12.0-beta.33:
+  version "0.12.0-beta.33"
+  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.33.tgz#cb539db9e41f06087b692f0f42491a73bc4bd013"
+  integrity sha512-seOm06exR36U0/EvR/CUNGuy99RAndoyWEdXg6S16rgEZ4G2Yj9iov/QdCtc4gwq9hFzVETFPlDW+Ge8xeHIzA==
 
-xterm@4.19.0-beta.29:
-  version "4.19.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.29.tgz#f0727ddbfe54f3c34a58e57ecbfcbb4d03a30386"
-  integrity sha512-ZlgrxgotcCB06W0Pk5ClHDkIDE62s1LebgehEsmaksJJtoOQJIxCVu1Kop4EnnPQzZxFaG7uYumfwe0tfd6uWA==
+xterm@4.19.0-beta.41:
+  version "4.19.0-beta.41"
+  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.41.tgz#acb6009028898e9cfac41d4aa2865f81f6f56c5f"
+  integrity sha512-WY1NuxF/yUVN3l0TgzQGjrGM26eOu5g0Dbfam8GCkgdK5yrsgPF0xwM7UEj8sDjp5FbxEkSm//X86IIsgzqqFw==
diff --git a/remote/yarn.lock b/remote/yarn.lock
index 46f213014ee..968449c7184 100644
--- a/remote/yarn.lock
+++ b/remote/yarn.lock
@@ -914,10 +914,10 @@ wrappy@1:
   resolved "https://registry.yarnpkg.com/wrappy/-/wrappy-1.0.2.tgz#b5243d8f3ec1aa35f1364605bc0d1036e30ab69f"
   integrity sha1-tSQ9jz7BqjXxNkYFvA0QNuMKtp8=
 
-xterm-addon-search@0.9.0-beta.26:
-  version "0.9.0-beta.26"
-  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.26.tgz#24259b892ce5cd8eff207e4e334dc06776356fe5"
-  integrity sha512-gOz6v9do7yBDP8e4zdpnDIi3DsyPdLA10lsJDucfMN4nJFM2PjJAsu1fbqq1pXdcu14fHIYzbsp9wIMiW524zQ==
+xterm-addon-search@0.9.0-beta.35:
+  version "0.9.0-beta.35"
+  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.35.tgz#524ee3be855c1e8db234c6795bdb44bb6baff8fd"
+  integrity sha512-hTDqAhqlhBvz3dtdK1Tg5Al2U3HquSHpV1xCX+bbOmbgprAxUrSQxslUPDD69CTazzTyif3L19M08hccRyr1Ug==
 
 xterm-addon-serialize@0.7.0-beta.12:
   version "0.7.0-beta.12"
@@ -929,20 +929,20 @@ xterm-addon-unicode11@0.4.0-beta.3:
   resolved "https://registry.yarnpkg.com/xterm-addon-unicode11/-/xterm-addon-unicode11-0.4.0-beta.3.tgz#f350184155fafd5ad0d6fbf31d13e6ca7dea1efa"
   integrity sha512-FryZAVwbUjKTmwXnm1trch/2XO60F5JsDvOkZhzobV1hm10sFLVuZpFyHXiUx7TFeeFsvNP+S77LAtWoeT5z+Q==
 
-xterm-addon-webgl@0.12.0-beta.29:
-  version "0.12.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.29.tgz#7a508595c4521d14d7ed4315a121f9e3f230a0f0"
-  integrity sha512-NcZBsD0ar3ZpQX070hDIsyEBl/StRMNu6U+9crNpiD2rQVfkM1vcWkOv31Zlj3eu6/f8z5aStyZLRMCGFwiRbA==
+xterm-addon-webgl@0.12.0-beta.33:
+  version "0.12.0-beta.33"
+  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.33.tgz#cb539db9e41f06087b692f0f42491a73bc4bd013"
+  integrity sha512-seOm06exR36U0/EvR/CUNGuy99RAndoyWEdXg6S16rgEZ4G2Yj9iov/QdCtc4gwq9hFzVETFPlDW+Ge8xeHIzA==
 
-xterm-headless@4.19.0-beta.29:
-  version "4.19.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm-headless/-/xterm-headless-4.19.0-beta.29.tgz#9151a1506ddcad3402ce456bbbc6af0828952742"
-  integrity sha512-wAPyWOp2whY9kT9NL7PMQtvR/A9UO1A4bhP0nOOhZxg9GDeCy5EvsuDn2x+dtsh4jK/L2SZxM6SPHLpNoZpbTQ==
+xterm-headless@4.19.0-beta.41:
+  version "4.19.0-beta.41"
+  resolved "https://registry.yarnpkg.com/xterm-headless/-/xterm-headless-4.19.0-beta.41.tgz#f495ff173c7952aafa0c785acf15f20942c6fdc7"
+  integrity sha512-j09IFsM4tBSpjgY5OQSB1llojwEGyFFxgD36MYXZtopmB8p9+0l5GFq5hYfJojGfHCNaB/RwWAexGUxBK2ABRA==
 
-xterm@4.19.0-beta.29:
-  version "4.19.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.29.tgz#f0727ddbfe54f3c34a58e57ecbfcbb4d03a30386"
-  integrity sha512-ZlgrxgotcCB06W0Pk5ClHDkIDE62s1LebgehEsmaksJJtoOQJIxCVu1Kop4EnnPQzZxFaG7uYumfwe0tfd6uWA==
+xterm@4.19.0-beta.41:
+  version "4.19.0-beta.41"
+  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.41.tgz#acb6009028898e9cfac41d4aa2865f81f6f56c5f"
+  integrity sha512-WY1NuxF/yUVN3l0TgzQGjrGM26eOu5g0Dbfam8GCkgdK5yrsgPF0xwM7UEj8sDjp5FbxEkSm//X86IIsgzqqFw==
 
 yallist@^4.0.0:
   version "4.0.0"
diff --git a/src/vs/workbench/contrib/terminal/browser/media/terminal.css b/src/vs/workbench/contrib/terminal/browser/media/terminal.css
index 02867a99753..945161cad7f 100644
--- a/src/vs/workbench/contrib/terminal/browser/media/terminal.css
+++ b/src/vs/workbench/contrib/terminal/browser/media/terminal.css
@@ -458,3 +458,9 @@
 .hc-light .xterm-find-result-decoration {
 	outline-style: dotted !important;
 }
+
+.hc-black .xterm-find-active-result-decoration,
+.hc-light .xterm-find-active-result-decoration {
+	outline-style: solid !important;
+	outline-width: 2px !important;
+}
diff --git a/src/vs/workbench/contrib/terminal/browser/terminal.ts b/src/vs/workbench/contrib/terminal/browser/terminal.ts
index 7a9ca118355..6d1494b10d3 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminal.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminal.ts
@@ -862,6 +862,8 @@ export interface IXtermTerminal {
 	 */
 	readonly shellIntegration: IShellIntegration;
 
+	readonly onDidChangeSelection: Event<void>;
+
 	/**
 	 * The position of the terminal.
 	 */
@@ -906,6 +908,11 @@ export interface IXtermTerminal {
 	 * Clears the search result decorations
 	 */
 	clearSearchDecorations(): void;
+
+	/**
+	 * Clears the active search result decorations
+	 */
+	clearActiveSearchDecoration(): void;
 }
 
 export interface IRequestAddInstanceToGroupEvent {
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalFindWidget.ts b/src/vs/workbench/contrib/terminal/browser/terminalFindWidget.ts
index 4ba93e51fb3..ec9e1af2191 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalFindWidget.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalFindWidget.ts
@@ -7,12 +7,14 @@ import { SimpleFindWidget } from 'vs/workbench/contrib/codeEditor/browser/find/s
 import { IContextViewService } from 'vs/platform/contextview/browser/contextView';
 import { IContextKeyService, IContextKey } from 'vs/platform/contextkey/common/contextkey';
 import { FindReplaceState } from 'vs/editor/contrib/find/browser/findState';
-import { ITerminalGroupService, ITerminalService } from 'vs/workbench/contrib/terminal/browser/terminal';
+import { ITerminalGroupService, ITerminalService, IXtermTerminal } from 'vs/workbench/contrib/terminal/browser/terminal';
 import { TerminalContextKeys } from 'vs/workbench/contrib/terminal/common/terminalContextKey';
 import { TerminalLocation } from 'vs/platform/terminal/common/terminal';
 import { IThemeService } from 'vs/platform/theme/common/themeService';
 import { IConfigurationService } from 'vs/platform/configuration/common/configuration';
 import { IKeybindingService } from 'vs/platform/keybinding/common/keybinding';
+import { Event } from 'vs/base/common/event';
+import { ISearchOptions } from 'xterm-addon-search';
 
 export class TerminalFindWidget extends SimpleFindWidget {
 	protected _findInputFocused: IContextKey<boolean>;
@@ -50,23 +52,24 @@ export class TerminalFindWidget extends SimpleFindWidget {
 	}
 
 	find(previous: boolean, update?: boolean) {
-		const instance = this._terminalService.activeInstance;
-		if (!instance) {
+		const xterm = this._terminalService.activeInstance?.xterm;
+		if (!xterm) {
 			return;
 		}
 		if (previous) {
-			instance.xterm?.findPrevious(this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue(), incremental: update });
+			this._findPreviousWithEvent(xterm, this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue(), incremental: update });
 		} else {
-			instance.xterm?.findNext(this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() });
+			this._findNextWithEvent(xterm, this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() });
 		}
 	}
 
 	override reveal(initialInput?: string): void {
-		const instance = this._terminalService.activeInstance;
-		if (instance && this.inputValue && this.inputValue !== '') {
+		const xterm = this._terminalService.activeInstance?.xterm;
+		if (xterm && this.inputValue && this.inputValue !== '') {
 			// trigger highlight all matches
-			instance.xterm?.findPrevious(this.inputValue, { incremental: true, regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() }).then(foundMatch => {
+			this._findPreviousWithEvent(xterm, this.inputValue, { incremental: true, regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() }).then(foundMatch => {
 				this.updateButtons(foundMatch);
+				this._register(Event.once(xterm.onDidChangeSelection)(() => xterm.clearActiveSearchDecoration()));
 			});
 		}
 		this.updateButtons(false);
@@ -109,9 +112,9 @@ export class TerminalFindWidget extends SimpleFindWidget {
 
 	protected _onInputChanged() {
 		// Ignore input changes for now
-		const instance = this._terminalService.activeInstance;
-		if (instance?.xterm) {
-			instance.xterm.findPrevious(this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue(), incremental: true }).then(foundMatch => {
+		const xterm = this._terminalService.activeInstance?.xterm;
+		if (xterm) {
+			this._findPreviousWithEvent(xterm, this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue(), incremental: true }).then(foundMatch => {
 				this.updateButtons(foundMatch);
 			});
 		}
@@ -130,6 +133,7 @@ export class TerminalFindWidget extends SimpleFindWidget {
 		const instance = this._terminalService.activeInstance;
 		if (instance) {
 			instance.notifyFindWidgetFocusChanged(false);
+			instance.xterm?.clearActiveSearchDecoration();
 		}
 		this._findWidgetFocused.reset();
 	}
@@ -148,7 +152,24 @@ export class TerminalFindWidget extends SimpleFindWidget {
 			if (instance.hasSelection()) {
 				instance.clearSelection();
 			}
-			instance.xterm?.findPrevious(this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() });
+			const xterm = instance.xterm;
+			if (xterm) {
+				this._findPreviousWithEvent(xterm, this.inputValue, { regex: this._getRegexValue(), wholeWord: this._getWholeWordValue(), caseSensitive: this._getCaseSensitiveValue() });
+			}
 		}
 	}
+
+	private async _findNextWithEvent(xterm: IXtermTerminal, term: string, options: ISearchOptions): Promise<boolean> {
+		return xterm.findNext(term, options).then(foundMatch => {
+			this._register(Event.once(xterm.onDidChangeSelection)(() => xterm.clearActiveSearchDecoration()));
+			return foundMatch;
+		});
+	}
+
+	private async _findPreviousWithEvent(xterm: IXtermTerminal, term: string, options: ISearchOptions): Promise<boolean> {
+		return xterm.findPrevious(term, options).then(foundMatch => {
+			this._register(Event.once(xterm.onDidChangeSelection)(() => xterm.clearActiveSearchDecoration()));
+			return foundMatch;
+		});
+	}
 }
diff --git a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
index 27c0a94e424..e36ce5e9de6 100644
--- a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
+++ b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
@@ -73,9 +73,10 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 
 	private readonly _onDidRequestRunCommand = new Emitter<{ command: ITerminalCommand; copyAsHtml?: boolean }>();
 	readonly onDidRequestRunCommand = this._onDidRequestRunCommand.event;
-
 	private readonly _onDidChangeFindResults = new Emitter<{ resultIndex: number; resultCount: number } | undefined>();
 	readonly onDidChangeFindResults = this._onDidChangeFindResults.event;
+	private readonly _onDidChangeSelection = new Emitter<void>();
+	readonly onDidChangeSelection = this._onDidChangeSelection.event;
 
 	get commandTracker(): ICommandTracker { return this._commandNavigationAddon; }
 	get shellIntegration(): IShellIntegration { return this._shellIntegrationAddon; }
@@ -165,6 +166,9 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 			}
 		}));
 
+		// Refire events
+		this.add(this.raw.onSelectionChange(() => this._onDidChangeSelection.fire()));
+
 		// Load addons
 		this._updateUnicodeVersion();
 		this._commandNavigationAddon = this._instantiationService.createInstance(CommandNavigationAddon, _capabilities);
@@ -173,6 +177,7 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 		this.raw.loadAddon(this._shellIntegrationAddon);
 		this._updateDecorationAddon();
 	}
+
 	private _createDecorationAddon(): void {
 		this._decorationAddon = this._instantiationService.createInstance(DecorationAddon, this._capabilities);
 		this._decorationAddon.onDidRequestRunCommand(e => this._onDidRequestRunCommand.fire(e));
@@ -287,6 +292,7 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 		// The mapping is as follows:
 		// - findMatch -> activeMatch
 		// - findMatchHighlight -> match
+		const terminalBackground = theme.getColor(TERMINAL_BACKGROUND_COLOR) || theme.getColor(PANEL_BACKGROUND);
 		const findMatchBackground = theme.getColor(TERMINAL_FIND_MATCH_BACKGROUND_COLOR);
 		const findMatchBorder = theme.getColor(TERMINAL_FIND_MATCH_BORDER_COLOR);
 		const findMatchOverviewRuler = theme.getColor(TERMINAL_OVERVIEW_RULER_CURSOR_FOREGROUND_COLOR);
@@ -294,10 +300,11 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 		const findMatchHighlightBorder = theme.getColor(TERMINAL_FIND_MATCH_HIGHLIGHT_BORDER_COLOR);
 		const findMatchHighlightOverviewRuler = theme.getColor(TERMINAL_OVERVIEW_RULER_FIND_MATCH_FOREGROUND_COLOR);
 		searchOptions.decorations = {
-			activeMatchBackground: findMatchBackground?.toString() || 'transparent',
+			activeMatchBackground: findMatchBackground?.toString(),
 			activeMatchBorder: findMatchBorder?.toString() || 'transparent',
 			activeMatchColorOverviewRuler: findMatchOverviewRuler?.toString() || 'transparent',
-			matchBackground: findMatchHighlightBackground?.toString() || 'transparent',
+			// decoration bgs don't support the alpha channel so blend it with the regular bg
+			matchBackground: terminalBackground ? findMatchHighlightBackground?.blend(terminalBackground).toString() : undefined,
 			matchBorder: findMatchHighlightBorder?.toString() || 'transparent',
 			matchOverviewRuler: findMatchHighlightOverviewRuler?.toString() || 'transparent'
 		};
@@ -321,6 +328,10 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
 		this._searchAddon?.clearDecorations();
 	}
 
+	clearActiveSearchDecoration(): void {
+		this._searchAddon?.clearActiveDecoration();
+	}
+
 	getFont(): ITerminalFont {
 		return this._configHelper.getFont(this._core);
 	}
diff --git a/src/vs/workbench/contrib/terminal/common/terminalColorRegistry.ts b/src/vs/workbench/contrib/terminal/common/terminalColorRegistry.ts
index 59ba5731ce5..9390d7ccdd7 100644
--- a/src/vs/workbench/contrib/terminal/common/terminalColorRegistry.ts
+++ b/src/vs/workbench/contrib/terminal/common/terminalColorRegistry.ts
@@ -5,7 +5,7 @@
 
 import * as nls from 'vs/nls';
 
-import { registerColor, ColorIdentifier, ColorDefaults, editorFindMatch, editorFindMatchHighlight, overviewRulerFindMatchForeground } from 'vs/platform/theme/common/colorRegistry';
+import { registerColor, ColorIdentifier, ColorDefaults, editorFindMatch, editorFindMatchHighlight, overviewRulerFindMatchForeground, editorSelectionBackground } from 'vs/platform/theme/common/colorRegistry';
 import { EDITOR_DRAG_AND_DROP_BACKGROUND, PANEL_BORDER, TAB_ACTIVE_BORDER } from 'vs/workbench/common/theme';
 
 /**
@@ -24,10 +24,11 @@ export const TERMINAL_FOREGROUND_COLOR = registerColor('terminal.foreground', {
 export const TERMINAL_CURSOR_FOREGROUND_COLOR = registerColor('terminalCursor.foreground', null, nls.localize('terminalCursor.foreground', 'The foreground color of the terminal cursor.'));
 export const TERMINAL_CURSOR_BACKGROUND_COLOR = registerColor('terminalCursor.background', null, nls.localize('terminalCursor.background', 'The background color of the terminal cursor. Allows customizing the color of a character overlapped by a block cursor.'));
 export const TERMINAL_SELECTION_BACKGROUND_COLOR = registerColor('terminal.selectionBackground', {
-	light: '#00000040',
-	dark: '#FFFFFF40',
+	light: editorSelectionBackground,
+	dark: editorSelectionBackground,
+	// TODO: hcDark should be editorSelectionBackground (white) when min contrast ratio moves luminance the other way when needed https://github.com/xtermjs/xterm.js/issues/3720
 	hcDark: '#FFFFFF80',
-	hcLight: '#0F4A85'
+	hcLight: editorSelectionBackground
 }, nls.localize('terminal.selectionBackground', 'The selection background color of the terminal.'));
 export const TERMINAL_COMMAND_DECORATION_DEFAULT_BACKGROUND_COLOR = registerColor('terminalCommandDecoration.defaultBackground', {
 	light: '#00000040',
@@ -60,26 +61,27 @@ export const TERMINAL_BORDER_COLOR = registerColor('terminal.border', {
 	hcLight: PANEL_BORDER
 }, nls.localize('terminal.border', 'The color of the border that separates split panes within the terminal. This defaults to panel.border.'));
 export const TERMINAL_FIND_MATCH_BACKGROUND_COLOR = registerColor('terminal.findMatchBackground', {
-	dark: null,
-	light: null,
+	dark: editorFindMatch,
+	light: editorFindMatch,
+	// Use regular selection background in high contrast with a thick border
 	hcDark: null,
-	hcLight: null
+	hcLight: '#0F4A85'
 }, nls.localize('terminal.findMatchBackground', 'Color of the current search match in the terminal. The color must not be opaque so as not to hide underlying terminal content.'));
 export const TERMINAL_FIND_MATCH_BORDER_COLOR = registerColor('terminal.findMatchBorder', {
-	dark: editorFindMatch,
-	light: editorFindMatch,
+	dark: null,
+	light: null,
 	hcDark: '#f38518',
 	hcLight: '#0F4A85'
 }, nls.localize('terminal.findMatchBorder', 'Border color of the current search match in the terminal.'));
 export const TERMINAL_FIND_MATCH_HIGHLIGHT_BACKGROUND_COLOR = registerColor('terminal.findMatchHighlightBackground', {
-	dark: null,
-	light: null,
+	dark: editorFindMatchHighlight,
+	light: editorFindMatchHighlight,
 	hcDark: null,
 	hcLight: null
 }, nls.localize('terminal.findMatchHighlightBackground', 'Color of the other search matches in the terminal. The color must not be opaque so as not to hide underlying terminal content.'));
 export const TERMINAL_FIND_MATCH_HIGHLIGHT_BORDER_COLOR = registerColor('terminal.findMatchHighlightBorder', {
-	dark: editorFindMatchHighlight,
-	light: editorFindMatchHighlight,
+	dark: null,
+	light: null,
 	hcDark: '#f38518',
 	hcLight: '#0F4A85'
 }, nls.localize('terminal.findMatchHighlightBorder', 'Border color of the other search matches in the terminal.'));
diff --git a/yarn.lock b/yarn.lock
index 13805339355..8b7a2c516e6 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -12194,10 +12194,10 @@ xtend@~2.1.1:
   dependencies:
     object-keys "~0.4.0"
 
-xterm-addon-search@0.9.0-beta.26:
-  version "0.9.0-beta.26"
-  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.26.tgz#24259b892ce5cd8eff207e4e334dc06776356fe5"
-  integrity sha512-gOz6v9do7yBDP8e4zdpnDIi3DsyPdLA10lsJDucfMN4nJFM2PjJAsu1fbqq1pXdcu14fHIYzbsp9wIMiW524zQ==
+xterm-addon-search@0.9.0-beta.35:
+  version "0.9.0-beta.35"
+  resolved "https://registry.yarnpkg.com/xterm-addon-search/-/xterm-addon-search-0.9.0-beta.35.tgz#524ee3be855c1e8db234c6795bdb44bb6baff8fd"
+  integrity sha512-hTDqAhqlhBvz3dtdK1Tg5Al2U3HquSHpV1xCX+bbOmbgprAxUrSQxslUPDD69CTazzTyif3L19M08hccRyr1Ug==
 
 xterm-addon-serialize@0.7.0-beta.12:
   version "0.7.0-beta.12"
@@ -12209,20 +12209,20 @@ xterm-addon-unicode11@0.4.0-beta.3:
   resolved "https://registry.yarnpkg.com/xterm-addon-unicode11/-/xterm-addon-unicode11-0.4.0-beta.3.tgz#f350184155fafd5ad0d6fbf31d13e6ca7dea1efa"
   integrity sha512-FryZAVwbUjKTmwXnm1trch/2XO60F5JsDvOkZhzobV1hm10sFLVuZpFyHXiUx7TFeeFsvNP+S77LAtWoeT5z+Q==
 
-xterm-addon-webgl@0.12.0-beta.29:
-  version "0.12.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.29.tgz#7a508595c4521d14d7ed4315a121f9e3f230a0f0"
-  integrity sha512-NcZBsD0ar3ZpQX070hDIsyEBl/StRMNu6U+9crNpiD2rQVfkM1vcWkOv31Zlj3eu6/f8z5aStyZLRMCGFwiRbA==
+xterm-addon-webgl@0.12.0-beta.33:
+  version "0.12.0-beta.33"
+  resolved "https://registry.yarnpkg.com/xterm-addon-webgl/-/xterm-addon-webgl-0.12.0-beta.33.tgz#cb539db9e41f06087b692f0f42491a73bc4bd013"
+  integrity sha512-seOm06exR36U0/EvR/CUNGuy99RAndoyWEdXg6S16rgEZ4G2Yj9iov/QdCtc4gwq9hFzVETFPlDW+Ge8xeHIzA==
 
-xterm-headless@4.19.0-beta.29:
-  version "4.19.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm-headless/-/xterm-headless-4.19.0-beta.29.tgz#9151a1506ddcad3402ce456bbbc6af0828952742"
-  integrity sha512-wAPyWOp2whY9kT9NL7PMQtvR/A9UO1A4bhP0nOOhZxg9GDeCy5EvsuDn2x+dtsh4jK/L2SZxM6SPHLpNoZpbTQ==
+xterm-headless@4.19.0-beta.41:
+  version "4.19.0-beta.41"
+  resolved "https://registry.yarnpkg.com/xterm-headless/-/xterm-headless-4.19.0-beta.41.tgz#f495ff173c7952aafa0c785acf15f20942c6fdc7"
+  integrity sha512-j09IFsM4tBSpjgY5OQSB1llojwEGyFFxgD36MYXZtopmB8p9+0l5GFq5hYfJojGfHCNaB/RwWAexGUxBK2ABRA==
 
-xterm@4.19.0-beta.29:
-  version "4.19.0-beta.29"
-  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.29.tgz#f0727ddbfe54f3c34a58e57ecbfcbb4d03a30386"
-  integrity sha512-ZlgrxgotcCB06W0Pk5ClHDkIDE62s1LebgehEsmaksJJtoOQJIxCVu1Kop4EnnPQzZxFaG7uYumfwe0tfd6uWA==
+xterm@4.19.0-beta.41:
+  version "4.19.0-beta.41"
+  resolved "https://registry.yarnpkg.com/xterm/-/xterm-4.19.0-beta.41.tgz#acb6009028898e9cfac41d4aa2865f81f6f56c5f"
+  integrity sha512-WY1NuxF/yUVN3l0TgzQGjrGM26eOu5g0Dbfam8GCkgdK5yrsgPF0xwM7UEj8sDjp5FbxEkSm//X86IIsgzqqFw==
 
 y18n@^3.2.1:
   version "3.2.2"